Grand jury: College of Marin Foundation doomed

The College of Marin Foundation "appears to be headed for dissolution" after using $464,000 in scholarship money to pay for consultants and other expenses, but $3.8 million remaining in the treasury is "considered safe" in the bank, according to a report by the Marin County Civil Grand Jury.

The foundation, rocked by turmoil amid allegations of spending improprieties that prompted the entire board to resign, has gone "dormant" and is in a "state of disarray" without any money to hire management staff, the panel said.

The foundation now limps along overseen by college president David Wain Coon and college trustee Diana Conti, and while the two have made "substantial attempts" to untangle foundation affairs, issues remain, the jury said.

The jury recommended officials make quarterly reports on the foundation or any successor organization, create an independent body to collect and administer donations to benefit students following dissolution of the foundation, and solicit emergency funds for students in immediate need of financial assistance.

Conti called the report comprehensive, saying jurors did lots of work and came up with "a fair representation of the situation." In the process, though, the panel incorrectly asserted that tax-exempt paperwork was not filed. "Tax filing has been done," she said, although tax advice is being sought on what more might be done to accommodate corporate donors. Coon agreed, saying, "Overall, given the complexity, they got it pretty accurate."

Conflict between the college and the independent foundation had been brewing for months before erupting last year amid allegations from ex-employees about foundation board mismanagement and misuse of funds, with fiscal chaos including unauthorized spending, allocation of restricted donor money to cover expenses, board dissension, missing checks, missing records and a mysterious $7,500 cash withdrawal.

The jury report, in large part a review of board spending, management and staff upheaval, audits and other issues initially reported by the Independent Journal, said jurors "intentionally" sidestepped discussion of events in terms of the personalities involved.

The jury left determining the merits of claims and accountability for what occurred "for others to explore," an apparent reference to the state Attorney General's Office which has been asked for assistance including determining "if there is a basis for legal action, for example, and in the event the decision is made to dissolve the foundation, how that process will unfold."

Instead, the jury sought to provide residents and donors "with more complete answers to what may be their most vexing questions (about) whether there is a safe vehicle for present and future donations in support of students and programs of the college."

The jury found that foundation directors siphoned $464,464 from 164 restricted donor funds to pay for unbudgeted expenses. Those included legal, accounting, auditing and contracting fees, pay for "general consulting" and temporary employees, as well as a lease for an off-campus office — even though the foundation already had an on-campus office.

Some $114,000 alone was taken from funds restricted for child care, early childhood education and English as a second language programs. "These grant funds no longer exist," the jury said.

The good news: There is still $3.8 million in 79 individual endowment funds that "remain whole," with most of the money invested in mutual funds through Wells Fargo Bank. But "due to the lack of foundation operating funds, there is no money to pay an executive director or other staff. "

Issues about an uncertain future include whether the foundation will be replaced with another organization. In the meantime, the college's Advancement Office is handling fundraising and related duties, with officials exploring whether the Marin Community Foundation might take over asset management.

While concerns remain that the turmoil has made donors wary, recent contributions to the foundation total about $350,000, including $250,000 from a single trust. The jury urged that donor qualms be eased by more transparency "regarding the status of the foundation, in ongoing efforts to restore the lost monies, clarity regarding the state of current donations, and attorney general involvement."

The goal, the jury added, is "restoring donor faith in the donation process ... the question remains as to how this can be accomplished."